May 2015 - The new Czech Civil Code that came into effect on 1 January 2014 has brought an important change to the system of ownership rights to real estate. Briefly, buildings now legally comprise part of the land on which they stand, whereas before they constituted a separate ownership object.

There are several exceptions to the above – a “temporary” building constitutes one such exception.

Since 1 January 2014, while most buildings must be purchased/sold together with the land on which they stand, a temporary building may be the subject of a separate purchase/sale, regardless of whether the land on which it stands is being disposed of.

This may be convenient for certain transactions, e.g. a temporary building may be pledged separately without encumbering the land on which it stands, and vice versa.

What is the definition of “temporary”?

Unfortunately, the Civil Code lacks a definition of a temporary building. The Construction Act merely states that a building is temporary if the Construction Authority has decided to limit the building’s existence. However, according to the prevailing legal opinion, the Construction Act (which falls under public law) should not be applied in respect of a private relationship between individual owners.

Therefore, any intention (on the part of a building owner) for a building to be temporary might provide a clue as to whether the building should in fact be considered temporary. However, such intention must be obvious, and the building owner cannot decide later that the building will be permanent. Alternatively, the temporary nature of a building could also be deduced from the actual use to which the building is put.

In practice, therefore, whether or not buildings shall be deemed to be temporary will most likely have to be decided by the courts establishing case precedents in this area.

Currently, the Land Register recognises either a decision of the Construction Authority (if a final occupancy permit declares a building to be temporary) or the intention of the owner (if such intention is evident – i.e. the land owner and the building owner agree jointly to register a building as temporary).

The above conclusions do not apply to any buildings registered in the Land Register prior to 1 January 2014. Such buildings are deemed to be permanent buildings, unless the owner of a temporary building submits evidence to the contrary.

Does a temporary building always have to be immovable property?

The wording of the Civil Code suggests that temporary buildings constitute movable property. However, it is advisable to consider whether a certain temporary building might be separated from the land on which it stands without the land and/or the building being somehow destroyed or damaged. Only buildings that can be removed/dismantled without damage can be considered as movable; otherwise a temporary building is considered to be immovable property and must therefore be registered in the Land Register. Such buildings are explicitly marked as temporary and the registration is kept separately from the land on which they stand.

Can a temporary building be located on the building owner’s land?

The Civil Code does not distinguish between a temporary building located on one’s own or someone else’s land, nor does it contain any rules disabling the location of the building in question on the building owner’s land. Theoretically, the owner of the land and the owner of the temporary building located on the land might be the same person and thus might transfer or encumber the land without any impact on the temporary building and vice versa. However, there is no majority consensus on this issue and it is recommended to pay due attention to such issues during any real estate transaction.